KiwiRail has given itself an August deadline to decide whether it will dump the Capital Connection, general manager of passenger services Deborah Hume has revealed.

Ms Hume said KiwiRail is in "close discussions" with regional councils over options to keep the service from Palmerston North to Wellington alive.

"We will be working through these over the coming weeks. We will continue to run the service while these options are worked through with a view to making a decision on the future of the service by August."

Last week Horizons and Greater Wellington Regional Council hammered out plans to create a business case for the service to entice the NZ Transport Agency into a joint funding scheme.

The agency has baulked at joining the regional councils in a plan to subsidise the service that carries about 15,000 passengers every month.

Greater Wellington floated the possibility of continuing the service as an extension of the Tranz Metro, which now runs from Wellington to Waikanae.

Political debate over the service ramped up this week as Labour's Otaki electorate committee backed a petition by Palmerston North MP Iain Lees-Galloway to keep the service alive.

The committee wants the Government to make the agency work with KiwiRail and the councils to maintain a viable rail link to Wellington, spokeswoman Jan Nimmo said.

"This train travels right through the Otaki electorate with many Horowhenua and Kapiti commuters, school groups, students and leisure travellers relying on the train...and without the Capital Connection, peak hours on the TranzMetro service will be even more congested."

With no Labour candidate selected, after the resignation of Darren Hughes and an unsuccessful run by Peter Foster, the electorate committee speaks for the party in Otaki.

Ms Nimmo said fare increases and the non-transferability of Capital Connection tickets within Tranz Metro showed KiwiRail wants to reduce the number of commuters using the service, prior to cancelling it.

Ms Hume said KiwiRail was not trying to reduce passenger numbers to justify cancelling the Capital Connection.

"No, quite the opposite KiwiRail has been focussed on ensuring the Capital Connection is a commercial service through managing costs, raising fares and undertaking targeted marketing initiatives."

KiwiRail has been unable to recover from the loss in patronage after the extension of the Kapiti line to Waikanae, she said.

"The November fare increase was aimed at lifting the viability of the service following the loss of passenger numbers. The increase was in line with the 5 per cent fare increase for Tranz Metro service's multi-trip and monthly fares which also took effect on November 1."